FREE

Breakfast Report - 21 June 2021

For the second month in a row, base-effects subdued inflationary pressures as headline inflation moderated to 17.93% y/y in May. Pressures on the food segment also softened, as food inflation eased to 22.28% y/y. This is largely attributed to high base effects and waning food supply shocks. The core segment sustained its ascent to 13.15% y/y, buoyed by low base effects from PMS pump price reductions in May’20 as well as higher FX pressures. Going forward, we see the increased volatility in the Naira spurring core inflation in June, despite the marginal gains from CBN interventions. In addition, food and headline inflation could continually ease on the back of high base effects.

Equity: After consecutive sessions of positive closes, we foresee investors coming into the market to sell today. Thus, we expect a bearish session.

Fixed Income: This week, we expect a quiet trading session today, as investors turn their attention to the forthcoming bonds auction. Similarly, we expect the NTB and OMO markets to trade in a tepid manner, given constrained system liquidity.